What Is Offshore Outsourcing And What Are Its Advantages?
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In today’s modern world, businesses of all sizes face competition, and in order to stay at the top, they not only want the best software, but they also want to cut development costs to save even more money. Businesses prefer to hire outsourcing companies to reduce software development costs, increase margins, and improve their services. In 2023, global outsourcing spending has reached $731 billion. Onshore outsourcing, Nearshore outsourcing, and Offshore outsourcing are the three main types of outsourcing processes. In this blog, we will learn more about what is offshore outsourcing and examine its benefits.
What is offshore outsourcing?
When an organization hires a third-party supplier to conduct operations from a different country, this is known as offshore outsourcing. To cut costs and access seasoned CX experts, offshore outsourcing companies provide services from low-cost regions around the world.
What Is The Advantage Of Offshore Outsourcing?
Source- https://truelist.co/blog/outsourcing-statistics/
Because companies hire workers from other countries where labour is less expensive, offshore outsourcing can be cost-effective. This can help businesses save money on things like salaries and benefits, allowing them to invest in other areas and remain competitive in the global market. Let’s explore the advantages of offshore outsourcing.
1. Advantage in the marketplace
When compared to peers in the same software sector, there is a significant difference in the apps they develop versus what they expect. Most of the time, businesses are concerned with the app’s quality, the amount invested, and the profit gained versus when they outsource. You have met all of these criteria, which will allow businesses to devote more time to strategic planning.
2. Reduced Turnaround Time
Higher productivity can be achieved by establishing a dedicated outsourcing development team that works around the clock, 24 hours a day, seven days a week. However, businesses in the same industry, which may not rely on outsourcing, might find it difficult to maintain a consistent high levels of productivity.
3. Round-the-clock Availability
Availability across time zones is another significant benefit of offshoring. It allows businesses to access a dedicated vast pool of resources whenever they need them. In fact, Asian outsourcing firms employ a team that works for clients in the United States during the hours that the US company is open. This demonstrates the availability of resources on time and in other time slots.
How To Manage Offshore Development Team?
Setting the right parameters for the project before you begin is the key to managing a remote team. Here are some things to consider before signing that outsourcing contract.
1. To avoid an overflowing budget, establish clear milestones
Without daily oversight, expenses can quickly spiral out of control. Begin with a billing agreement to learn how to manage an offshore development team. Are your programmers paid on a monthly basis? Or will they bill by the hour? How is it typically dealt with when there is additional work? It is critical that you comprehend the estimate you receive, as well as the estimated number of hours. How did they come up with the figures? Does their delivery output correspond to your expectations?
Ask your developers if they have a platform that allows you to see the hours spent on your behalf on a daily basis. Seeing the hours as they pass may help you resist the urge to request additional revisions or rebuilds, as well as ensure you’re doing offshore team management effectively.
2. Determine the best communication tools
You’ll quickly learn how offshore software developers can effectively double your output if you have the right tool permissions. So, take a moment to consider how you intend to manage coders who aren’t within arm’s reach.
Will they have direct access to your backend data systems? Or will they work independently and only attach their work to your site at the last possible moment? How quickly can you establish their security clearance? What do they need to see, and what do they need to avoid seeing? If you answer these questions early on, you’ll discover that offshoring isn’t nearly as difficult as you think.
3. Agile can help you increase your efficiency
The project process is covered by A capital in Agile methodology. It is the gold standard for programming project flow, and by implementing its best practices, you can significantly improve the development process. While most coders are familiar with agile workflows, you should always specify how Agile development will be implemented in your organisation. When your processes are in sync, managing offshore teams can more than double your productivity.
Read more: How to Track Employee Performance?
4. Make sure to introduce your new team members to your processes
Agile is insufficient on its own. What internal policies and procedures will have an impact on your consulting programmers? What about your data security? Will they require access to your front-end or back-end systems? Is there an approval process or a development chain that they must follow? Whenever possible, provide written documentation of your processes. It may not only assist your new team members in figuring out the details of work, but it may also cause you to reconsider all work processes.
5. Plan ahead of time to account for time differences
You may be concerned about how to manage an offshore software development team if you have a global setup. However, if properly planned, global programmers can be a huge asset. After all, your offshore development team could be working while you’re sleeping. True 24/7 programming is not only possible but also affordable, often resulting in a 50% lower costs while shortening development cycles. Consider how work will be transferred between your teams from shift to shift. Maintain your development juggernaut by managing offshore developers to your advantage.
Offshore VS Outsource
Source- https://www.zippia.com/advice/outsourcing-statistics/
Although the terms are frequently used interchangeably, there are some important distinctions between outsourcing and offshoring:
Outsourcing
This entails contracting out work to a third party, who may or may not be located in another country. It is possible to outsource work to a vendor without sending it offshore. A North American company, for example, may hire a local accounting firm to manage its bookkeeping rather than having its own employees do the work in-house.
Offshoring
This is when a company relocates some of its operations and employees to a less developed country with cheap labour and resources. It is possible for a company to establish offshore operations without using a third party. A company, for example, may relocate its call centres to India to better serve its North American customers.
Also Read: What are the Best Practices to Monitor Remote Employees?
Offshore Outsourcing Examples
Let’s explore some offshore outsourcing examples.
1. WhatsApp
Offshoring allows your in-house team to focus on the most pressing issues confronting your company at the time. Prior to the launch of WhatsApp in 2009, the company outsourced its software development to Eastern Europe. WhatsApp relied on offshore talent to handle the backstage, design solutions, and core app development, while their in-house engineers focused on client-related tasks like customer support. The messaging app quickly rose to the top of the AppStore and Google Play. This situation compelled Facebook to acquire WhatsApp for $19 billion, defeating its main competitor. It was the largest acquisition of a venture-backed company ever made at the time.
2. Google
This is yet another major player on the list of successful offshoring firms. By establishing its software development team on the CloudSimple platform in 2020, Google became one of the companies that had offshored to Eastern Europe. The acquisition of this company demonstrates that there is always room for advancement and innovation, even when you have the world’s largest developer team. CloudSimple has joined Google Cloud and enhanced its VMware migration solution. There is also no doubt that the decision to outsource was not influenced by a lack of expertise. However, because of offshore hiring, it enabled a significant reduction in business expenses.
Conclusion
The practice of hiring workers or contracting services from other countries in order to reduce costs and improve efficiency is known as offshore outsourcing. Its benefits include cost savings from lower labour expenses in offshore locations, access to a global talent pool, increased focus on core business functions, and the ability to operate 24 hours a day, seven days a week. While it provides these advantages, companies must carefully consider cultural differences, communication challenges, and data security concerns when implementing offshore outsourcing strategies. Offshore outsourcing, when done wisely and thoughtfully, can be a valuable tool for businesses seeking to thrive in a competitive global marketplace.
Frequently Asked Questions
Q1: How can outsourcing help your business?
Outsourcing some tasks will free up time and space for you and your in-house team to focus on what you do best. This ensures that your team remains productive without having to focus on too many time-consuming tasks or hire and train additional employees.
Q2: What are the reasons for outsourcing?
Outsourcing is extremely beneficial to all types of businesses. It is most commonly used when a company receives a large number of customer inquiries and does not have time to focus on every aspect of the business or customer service. Outsourcing these types of tasks allows you and your employees to focus on the most important aspects of your business and keep things running smoothly.
